Big expenses retirees didn’t save for - but should have
Experts and retirees identified six expenses that retirees should have saved more to cover, according to an article on TheStreet. The first was taxes. Thirteen states tax at least some Social Security income. Forty three states tax pensions. Also, the IRS will tax money withdrawn from a tax advantaged savings plan. Many seniors assume they will stop paying taxes when they retire, according to the article, but that's not true and budgets should be constructed with the tax man in mind. In addition to taxes, vacations and other fun activities are among big expenses that retirees usually fail to save for, according to TheStreet. Retirees should also consider dental expenses such as implants and dentures that may not be covered in dental insurance plans as well as hearing aids costs and other health care expenses that may not be covered in Medicare. Also, retirees should account for new car expenses every seven years until they reach 80 years old.
How to live a longer and happier retirement
Retirees, who have enough income to live comfortably, can help others through volunteer activities to help raise their quality of life, according to this article on CNN Money. A previous study found that volunteering can help people reduce their risk of depression and raise their sense of well-being. It is also important for retirees looking for a longer and happier retirement to get a better grasp of their finances and spending to avoid unnecessary stress and anxiety, to build a solid social network and engage in social activities and to keep fit both mentally and physically.
Student loan debt isn’t the only thing keeping millennials awake
A survey by Schwab Retirement Plan Services shows that the top source of financial stress for millennials are their retirement savings and whether it would be enough for them, followed by monthly expenses, credit card debt and student loan debt, according to an article on CNBC. Investors in 401(k) plans across different age groups also cite retirement savings as their number one financial stressor. Employers are advised to help reduce employees' retirement stress through additional financial guidance and education programs, financial wellness services and hands-on advice to help them overcome common obstacles to saving for retirement.
How to use time to potentially double retirement income in five years
Retirees can double their retirement income in five years, according to Marketwatch, but they have to consider one key element - time. The choice of when to retire is vital to the amount of retirement income you will get to use in the future and the most profitable option would be postponing retirement, which would result in a boost in your portfolio by as much as 50%.
Rethinking a retirement nest egg
Retirees should create a budget to ensure that they don't run out of funds later in their retirement, according to Kiplinger. Common reasons for running out of money include overspending on gifts, underestimating living costs, living longer than expected and not changing investment methods after retirement. Thus, retirees should ensure that their budget reflects their projected lifestyle cost after retirement, including large purchases. Budgets should also reflect factors in inflation, assume death at age 100 or later and adopt an investment portfolio with low volatility.